The laws that are used to determine how employers must be covered by workers compensation insurance vary from state to state. These laws are also the ones that determine the classification of employees for rating premium. Majority of states have enacted class codes that are specific to them and have different requirements for who is obligated to be covered by workers’ compensation insurance.
If you frequently send your employees out of state to perform work related duties, or your company has branches in multiple states, we recommend that you buy a policy for each of the of them in the state they are located and working. In most cases, you can choose one policy to cover multiple states. With that said, here is what you need to know about worker’s compensation insurance in Texas.
Texas Worker’s Compensation Laws
State laws in Texas allow an employer to purchase worker’s compensation insurance from authorized private insurance companies. For businesses that are not able to find cover from private companies, there is an alternate State Insurance Fund and an Assigned Risk Pool that they can work with.
Some of the factors that determine policy premium include previous workers compensation claims, owner experience, prior policies, covered states, estimated payroll, and class codes assigned to the business and employees.
Workers’ Compensation Requirements in Texas
The state of Texas doesn’t require employers to purchase workers’ compensation insurance cover for their employees. Employers who opt to get coverage for their employees are referred to as Subscribers and those that don’t are Non-subscribers. Even though non-subscribers choose not to purchase the coverage, they are still responsible for paying benefits to employees.
Sole-proprietors and partners are automatically required to get workers’ compensation. However, they can choose to be removed from the coverage.
LLC members and Corporate officers are also automatically included in this insurance cover. However, as it is with sole-proprietors and partners, they also have the option of choosing to be excluded by filing a Rejection of Coverage Form.
All business entities in government projects in Texas are required to get workers’ compensation coverage for their employees.
Texas Workers Compensation Verification
Employers and employees in Texas can verify the status of their workers’ compensation insurance coverage. They can do this through a free online tool provided by the state. Anybody can perform a search on the said tool by using FEIN or the business’s name. Results from the system will only indicate the name of the business and employer’s policy numbers if they have subscribed to receive coverage. The Texas Department of Insurance is the state agency responsible for managing this information. Therefore, you can use this online tool to:
- Locate a self-insured government employer
- Verify is a company holds a Certificate of Authority as a Certified Self Insurer
- Verify individual employer workers’ compensation commercial policy coverage
- Verify works’ compensation coverage information for employers
Check out https://qcare.org/what-is-qcare/designation-process/ for more info.
How is Workers’ Comp Calculated?
In Texas, workers’ compensation rates are calculated as a percentage of $100 in salaries. This applies to all job classification codes. An audit will be conducted if you are covered by an annual policy because the policy was based on estimated earnings and not actual earnings.